The problem here, Mukul, is that for each leaf node in the source
document, all leaf nodes in $doc2 will be copied.  If you were to add
a few extra leaf nodes to the examples this would become apparent.

<?xml version="1.0"?>
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">

<xsl:template match="node() | @*">
  <xsl:copy>
    <xsl:apply-templates select="node() | @*" />
  </xsl:copy>
</xsl:template>

<xsl:template match="*[* and not(*/*)]">
  <xsl:copy>
    <xsl:copy-of select="*" />
    <xsl:copy-of select="$doc2//*[not(*)]" />
  </xsl:copy>
</xsl:template>

Regards,
Mukul